Coalition formation as a dynamic process

Hideo Konishi, Debraj Ray

    Research output: Contribution to journalArticlepeer-review

    Abstract

    We study coalition formation as an ongoing, dynamic process, with payoffs generated as coalitions form, disintegrate, or regroup. A process of coalition formation (PCF) is an equilibrium if a coalitional move to some other state can be "justified" by the expectation of higher future value, compared to inaction. This future value, in turn, is endogenous: it depends on coalitional movements at each node. We study existence of equilibrium PCFs. We connect deterministic equilibrium PCFs with unique absorbing state to the core, and equilibrium PCFs with multiple absorbing states to the largest consistent set. In addition, we study cyclical as well as stochastic equilibrium PCFs.

    Original languageEnglish (US)
    Pages (from-to)1-41
    Number of pages41
    JournalJournal of Economic Theory
    Volume110
    Issue number1
    DOIs
    StatePublished - May 1 2003

    Keywords

    • Coalition formation
    • Dynamic equilibrium
    • Farsightedness

    ASJC Scopus subject areas

    • Economics and Econometrics

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